The Hartford 2014 Annual Report Download

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



(Mark One)
þ



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
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. þ
if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. þ
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.
þ
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).
þ
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.
þ
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 þ 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.) þ
The aggregate market value of the shares of Common Stock held by non-affiliates of the registrant as of June 30, 2014 was approximately $16 billion, based on the closing price of
$35.81 per share of the Common Stock on the New York Stock Exchange on June 30, 2014.
As of February 24, 2015, there were outstanding 420,951,148 shares of Common Stock, $0.01 par value per share, of the registrant.

Portions of the registrant’s definitive proxy statement for its 2015 annual meeting of shareholders are incorporated by reference in Part III of this Form 10-K.

Table of contents

  • Page 1
    ... 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.): Common Stock, 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...

  • Page 2
    ... 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 Ownership of Certain Beneficial Owners and Management...

  • Page 3
    ...or restructurings; financial risk related to the continued reinvestment of our investment portfolios and performance of our hedge program for our runoff annuity block; market risks associated with our business, including changes in interest rates, credit spreads, equity prices, market volatility and...

  • Page 4
    ... changes in accounting principles and related financial reporting requirements; the Company's ability to protect its intellectual property and defend against claims of infringement; and other factors described in such forward-looking statements. Any forward-looking statement made by the Company...

  • Page 5
    ... 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, bond, and specialty casualty coverages are offered...

  • Page 6
    ...and professional liability insurance products including D&O (directors and officers) and E&O (errors and omissions) liability products. Marketing and Distribution Standard commercial lines provide insurance products and services through the Company's home office located in Hartford, Connecticut, and...

  • 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
    ...Benefits business provides opportunities not available to smaller companies. Mutual Funds Principal Products and Services Mutual Funds provides investment management, administration, distribution and related services to investors through investment products in both domestic and international markets...

  • Page 9
    ... and private placement life insurance with account value of approximately $40 billion as of December 31, 2014. In 2014, the Company completed the sale of its Japan annuity business. The Talcott Resolution business segment includes our Retirement Plans and Individual Life businesses sold in 2013...

  • Page 10
    .... For further discussion of HIMCO's portfolio management approach, see Part II, Item 7, MD&A - Enterprise Risk Management. In addition to managing the general account assets of the Company, HIMCO is also a SEC registered investment adviser for a variable insurance trust and third party institutional...

  • Page 11
    ... The Chief Risk Officer reports directly to the Company's Chief Executive Officer ("CEO"). The Company has established the Enterprise Risk and Capital Committee ("ERCC") that includes the Company's CEO, President, Chief Financial Officer, Chief Investment Officer, Chief Risk Officer, General Counsel...

  • Page 12
    ... than 10% of The Hartford's outstanding common 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...

  • Page 13
    ... on filing date, and will typically expire at the end of their natural term. Employees The Hartford has approximately 17,500 employees as of December 31, 2014. Tvailable Information The Company's Internet address is www.thehartford.com. Our annual report on Form 10-K, quarterly reports on Form 10...

  • Page 14
    ... operating environment, including general economic and global capital market conditions, including financial and capital markets risks, such as changes in interest rates, credit spreads, equity prices, market volatility, foreign exchange rates, commodities prices and real estate market deterioration...

  • Page 15
    ... risk premiums. This could result in reductions in market value and 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...

  • Page 16
    ...in the Company's consolidated financial statements: fixed maturities, equity securities, freestanding and embedded derivatives, certain hedge fund investments, and separate account assets. The determination of fair values is made at a specific point in time, based on available market information and...

  • Page 17
    ...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 18
    ... amount of additional capital our insurance subsidiaries must hold to support business growth, changes in equity market levels, the value of certain fixed-income and equity securities in our investment portfolio, the value of certain derivative instruments, changes in interest rates, the impact of...

  • Page 19
    ... credit risk resulting from the sale of the Company's Individual Life business. Further details of such concentration can be found in Part II, Item 7, MD&A - Reinsurance as a Risk Management Strategy - Life Insurance Product Reinsurance Recoverable. In addition, market conditions beyond our control...

  • Page 20
    ... depositary shares representing such preferred stock then outstanding. The terms of our outstanding junior subordinated debt securities prohibit us from declaring or paying any dividends or distributions on our capital stock or purchasing, acquiring, or making a liquidation payment on such stock, if...

  • Page 21
    ... and legal developments and expense levels. We seek to price our property and casualty insurance 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...

  • Page 22
    ... rates, participate in the operating losses of residual market plans or pay assessments to fund operating deficits of state-sponsored funds, possibly leading to unacceptable returns on equity. The laws and regulations of many states also limit an insurer's ability to withdraw from one or more lines...

  • Page 23
    ... capital and reserve requirements, limitations on the types and amounts of certain investments, underwriting limitations, transactions with affiliates, dividend limitations, changes in control, premium rates and a variety of other financial and non-financial components of an insurer's business...

  • Page 24
    ...previously sold annuity contracts that allowed policyholders to defer the recognition of taxable income earned within the contract. Because the Company no longer sells these products, changes in the future taxation of life insurance and/or annuity contracts will not adversely impact future sales. If...

  • Page 25
    ..., 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...

  • Page 26
    ... is highly dependent on our ability to manage operational risks that arise from a large number of day-to-day business activities, including insurance underwriting, claims processing, servicing, investment, financial and tax reporting, compliance with regulatory requirements and other activities...

  • Page 27
    ... property rights, we could incur substantial liability, and in some circumstances could be enjoined from providing certain products or services to our customers or utilizing and benefiting from certain methods, processes, systems, copyrights, trademarks, trade secrets or licenses, or alternatively...

  • Page 28
    ... 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 29
    ... of the Company's securities, the Company's capital position, consideration of the effect of any repurchases on the Company's financial strength or credit ratings, and other corporate considerations. The repurchase program may be modified, extended or terminated by the Board of Directors at any time...

  • Page 30
    ... annual percentage return and five-year total return on its common stock including reinvestment of dividends in comparison to the S&P 500 and the S&P Insurance Composite Index. Tnnual Return Percentage For the years ended Company/Index 2010 2011 2012 2013 2014 The Hartford Financial Services Group...

  • Page 31
    ... operations, net of tax Net income (loss) Preferred stock dividends and accretion of discount Net income (loss) available to common shareholders Balance Sheet Data Total assets Short-term debt Total debt (including capital lease obligations) Preferred stock Total stockholders' equity Net income...

  • Page 32
    ... of Operations Investment Results Critical Accounting Estimates Key Performance Measures and Ratios Commercial Lines Personal Lines Property & Casualty Other Operations Group Benefits Mutual Funds Talcott Resolution Corporate Enterprise Risk Management Capital Resources and Liquidity Impact of New...

  • Page 33
    ...business customers in the United States and continues to administer life and annuity products previously sold. The Hartford currently conducts business principally in six reporting segments including Commercial Lines, Personal Lines, Property & Casualty Other Operations, Group Benefits, Mutual Funds...

  • Page 34
    ... term interest rates and wider credit spreads increased the after-tax net unrealized gains in the investment portfolio by approximately $1.4 billion for the year. Property & Casualty written premium increased 3% over the prior year, comprised of 3% growth in Commercial Lines and 4% in Personal Lines...

  • Page 35
    ..., in 2014, in insurance operating costs and other expenses, related to voluntary lump-sum settlements with vested participants in the Company's defined benefit pension plan who had separated from service, but who had not yet commenced annuity benefits. For additional information, see MD&A - Capital...

  • Page 36
    ...'s annual review of its asbestos liabilities. For further information, see MD&A - Critical Accounting Estimates, Property & Casualty Other Operations Claims with the Property and Casualty Insurance Product Reserves, Net of Reinsurance. Differences between the Company's effective income tax rate and...

  • Page 37
    ... segment sections of MD&A. Net income (loss) by segment Commercial Lines Personal Lines Property & Casualty Other Operations Group Benefits Mutual Funds Talcott Resolution Corporate Net income (loss) Investment Results Composition of Invested Assets December 31, 2014 Tmount Percent December 31, 2013...

  • Page 38
    ...the Japan variable and fixed annuity business, the Retirement Plans and Individual Life businesses, and the Hartford Life International Limited business, as applicable. [2] Includes net investment income on short-term investments. [3] Primarily includes income from derivatives that qualify for hedge...

  • Page 39
    ... sales of the Retirement Plans and Individual Life businesses in 2013. [3] Primarily consists of changes in value of non-qualifying derivatives, including interest rate derivatives used to manage duration, and the Japan fixed payout annuity hedge. Details on the Company's net realized capital gains...

  • Page 40
    ... of $71 on interest rate derivatives primarily associated with fixed rate bonds sold as part of the Individual Life and Retirement Plan business dispositions. For further information on the business dispositions, see Note 2 of Notes to the Consolidated Financial Statements. Additional gains included...

  • Page 41
    ... 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 42
    ... 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 $271 as of December 31, 2014, comprised of $46 related to Commercial Lines and $225 related to Property & Casualty...

  • Page 43
    ... Company's property and casualty 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...

  • Page 44
    ... to predict and external information can be used to supplement internal data in making severity estimates. Personal Auto Liability. For auto liability, and bodily injury in particular, the Company performs a greater number of techniques than it does for property and auto physical damage. In addition...

  • Page 45
    ... mix of business by type of insured than the Company experienced in the past. Such changes in mix increase the uncertainty of the reserve projections, since historical data and reporting patterns may not be applicable to the new business. In standard commercial lines, workers' compensation is the...

  • Page 46
    ...by the aggregate paid and reported activity. Once the gross ultimate exposure for indemnity and allocated loss adjustment expense is determined for its insureds by each policy year, the Company calculates its ceded reinsurance projection based on any applicable facultative and treaty reinsurance and...

  • Page 47
    .... Total Property and Casualty Insurance Product Reserves, Net of Reinsurance, Results In the opinion of management, based upon the known facts and current law, the reserves recorded for the Company's property and casualty insurance products at December 31, 2014 represent the Company's best estimate...

  • Page 48
    ... to earned premiums. [3] Contributing to the current accident year catastrophes losses were the following events: For the year ended December 31, 2014 Total Property and Casualty Insurance 241 73 27 341 Category Wind and hail [1] Winter storms [1] Other [2] $ Commercial Lines Personal Lines 196...

  • Page 49
    ...year ended December 31, 2014 Commercial Lines Auto liability Homeowners Professional liability Package business General liability Bond Commercial property Net asbestos reserves Net environmental reserves Workers' compensation Change in workers' compensation discount, including accretion Catastrophes...

  • Page 50
    ... premiums. [3] Contributing to the current accident year catastrophes losses were the following events: For the year ended December 31, 2013 Total Property and Casualty Insurance 168 90 54 312 Category Wind and hail [1] Tornadoes [1] Other [2] $ Commercial Lines 65 $ 27 13 Personal Lines 103...

  • Page 51
    ... Fund for Reopened Cases Change in workers' compensation discount, including accretion Catastrophes Other reserve re-estimates, net Total prior accident years development $ 141 $ - (29) 2 (75) (8) (7) - - (25) (2) 80 30 (24) - 83 $ Personal Lines Property & Casualty Total Property & Other Operations...

  • Page 52
    ... Contributing to the current accident year catastrophes losses were the following events: For the year ended December 31, 2012 Total Property and Casualty Insurance 256 70 350 30 706 Category Wind and hail [1] Tornadoes [1] Storm Sandy Other [1][2] $ Commercial Lines 84 $ 30 207 4 Personal Lines...

  • Page 53
    ... December 31, 2012 Commercial Lines Auto liability Homeowners Professional liability Package business General liability Bond Commercial property Net asbestos reserves Net environmental reserves Workers' compensation Change in workers' compensation discount, including accretion Catastrophes Other...

  • Page 54
    ...or settlement, if any, is reclassified to the appropriate cause of loss. [2] Excludes amounts reported in Commercial Lines and Personal Lines reporting segments (collectively "Ongoing Operations") for asbestos and environmental net liabilities of $16 and $6 respectively, as of December 31, 2014, $18...

  • Page 55
    ... 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 56
    ... 2014, 2013 and 2012, the Company completed its annual ground-up asbestos reserve evaluations. As part of these evaluations, the 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...

  • Page 57
    ... to perform its regular comprehensive review of Property & Casualty Other Operations reinsurance recoverables annually. Due to the inherent uncertainties as to collection and the length of time before reinsurance recoverables become due, particularly for older, long-term casualty liabilities, it is...

  • Page 58
    ... section for further discussion of the potential for variability in recorded loss reserves. Commercial Lines Tnnual range of prior accident year unfavorable (favorable) development for the ten years ended December 31, 2014 Personal Lines Property & Casualty Other Operations Total Property & Casualty...

  • Page 59
    ...-estimates are applicable. The amounts in the total accident year column on the far right represent the cumulative reserve re-estimates during the ten year period ended December 31, 2014 for the indicated accident year(s). Effect of Net Reserve Re-estimates on Calendar Year Operations Calendar Year...

  • Page 60
    ... in 2008 and 2009 related to the 2005 through 2007 accident years due to a lower estimate of claim severity on both directors' and officers' insurance claims and errors and omissions insurance claims. Reserves of auto liability claims, within Personal Lines, were released in 2008 due largely to an...

  • Page 61
    ...the deferred policy acquisition costs ("DAC") asset, sales inducement assets ("SIA") and unearned revenue reserves ("URR"). Portions of EGPs are also used in the valuation of reserves for death and other insurance benefit features on variable annuity and other universal life type contracts. The most...

  • Page 62
    ... of the variable 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...

  • Page 63
    ... periods' net income. Oversight of the Company's valuation policies and processes for product and GMWB reinsurance derivatives is performed by a multidisciplinary group comprised of finance, actuarial and risk management professionals. This multidisciplinary group reviews and approves changes and...

  • Page 64
    ... estimated cash flows, prepayment speeds and default rates. Based on the typical trading volumes and the lack of quoted market prices for fixed maturities, third-party pricing services will normally derive the security prices through recent reported trades for identical or similar securities making...

  • Page 65
    ... the level of tax exempt securities held, making investments that allow utilization of foreign tax credits, business considerations such as asset-liability matching, and making investments which have specific tax characteristics. Management views such tax planning strategies as prudent and feasible...

  • Page 66
    ...' 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 value. These revenues increase or decrease with a rise or...

  • Page 67
    ... ratio for the underwriting segments of Commercial Lines and Personal Lines is the ratio of underwriting expenses to earned premiums. Underwriting expenses include the amortization of deferred policy acquisition costs and insurance operating costs and expenses, including certain centralized services...

  • Page 68
    ... rise or fall in the amount of account value whether caused by changes in the market or through net flows. New business written premium New business written premium represents the amount of premiums charged for policies issues to customers who were not insured with the Company in the previous policy...

  • Page 69
    ...measure of before-tax profitability derived from underwriting activities, which are managed separately from the Company's investing activities. A reconciliation of underwriting gain (loss) to net income (loss) for Commercial Lines, Personal Lines and Property & Casualty Other Operations is set forth...

  • Page 70
    ... these insurance contracts. Two major factors, new sales and persistency, impact premium growth. Sales can increase or decrease in a given year based on a number of factors, including but not limited to, customer demand for the Company's product offerings, pricing competition, distribution channels...

  • Page 71
    ...from operations and sale in 2011 of Specialty Risk Services ("SRS"). [2] Includes servicing revenues of $113, $112, and $102 for the years ended December 31, 2014, December 31, 2013, and December 31, 2012 respectively. Premium Measures [1] New business premium Standard commercial lines policy count...

  • Page 72
    ...growth in 2015 driven by small commercial and middle market where the Company continues to develop comprehensive product solutions, deeper relationships with distribution partners, differentiating customer experiences and enhanced ease of doing business processes and technologies. In specialty lines...

  • Page 73
    ... and auto and favorable overall inforce policy retention. Written premium decreases in specialty lines were primarily the result of underwriting actions to reposition the captives business and exit unprofitable programs partially offset by new business growth in national accounts. The Company ceased...

  • Page 74
    ... adjustment expenses Amortization of DAC Underwriting expenses Underwriting gain Net servicing income [1] Net investment income Net realized capital gains (losses) Other income (expenses) Income before income taxes Income tax expense Net income [1] Includes servicing revenues of $163 and $155 for...

  • Page 75
    ... Product Combined Ratios 2014 65.6 6.1 (1.2) 70.5 25.0 95.5 4.9 90.6 2013 65.9 5.7 (1.1) 70.5 26.4 96.9 4.6 92.3 2012 65.7 10.5 (3.9) 72.3 26.6 98.9 6.6 92.3 Automobile Homeowners 2015 Outlook 98.4 90.0 99.0 90.7 99.1 98.2 The Company expects moderate written premium growth driven by AARP...

  • Page 76
    ... development. Revenues - Earned and Written Premiums Earned and written premiums increased in 2013, reflecting new business written premium growth in auto and home, primarily from the AARP Direct and AARP through agents distribution channels and improved policy count retention in auto and home due...

  • Page 77
    ... of losses in auto liability, homeowners and catastrophes. For additional information, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves, Net of Reinsurance. • • Underwriting Ratios The combined ratio, before current accident year catastrophes and...

  • Page 78
    ...Income Taxes section within Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements. For information on net asbestos and environmental reserves, see Property & Casualty Other Operations Claims within the Property and Casualty Insurance Product...

  • Page 79
    GROUP BENEFITS Results of Operations Operating Summary Premiums and other considerations [1] Net investment income Net realized capital gains Total revenues Benefits, losses and loss adjustment expenses Amortization of deferred policy acquisition costs Insurance operating costs and other expenses ...

  • Page 80
    ..., net investment income and net realized capital gains, offset by lower benefits, losses and loss adjustment expenses and insurance operating costs and other expenses. Premiums and other considerations decreased in 2014, as compared to the prior year period, due primarily to management actions...

  • Page 81
    ... Annuity Mutual Fund Assets) consist of Company-sponsored mutual fund assets held in separate accounts supporting variable insurance and investment products. The year ended December 31, 2014 includes a planned asset transfer of $2.0 billion to HVIT. [3] Includes balanced, allocation, target date...

  • Page 82
    ...the year ended December 31, 2013 Net income, as compared to the prior year period, increased in 2014 primarily due to higher fee revenue driven by higher Mutual Fund average AUM. AUM increased reflecting positive market performance of the Mutual Fund assets throughout the year coupled with year over...

  • Page 83
    ... Retirement Plans, Individual Life, and Private Placement Life Insurance businesses; respectively. Account values associated with the Retirement Plans, and Individual Life businesses no longer generate asset-based fee income due to the sales of these businesses through reinsurance. [5]Includes net...

  • Page 84
    ... 2012 from the operations of the Retirement Plans and Individual Life businesses sold in 2013. For further discussion of investment results and the results of the variable annuity hedge program, see MD&A - Investment Results, Net Investment Income (Loss) and Net Realized Capital Gains (Losses). For...

  • Page 85
    ... translation impacts, partially offset by market value appreciation in variable annuities. In addition, the net decrease in account value reflects the disposition of $1.8 billion of variable annuities related to the sold U.K. business. In 2013 variable annuity net outflows increased by approximately...

  • Page 86
    ... partially driven by net realized capital losses due to higher long-term interest rates and global credit hedging losses due to increases in the equity market as compared with net realized capital gains in 2012. Insurance operating costs and other expenses decreased due to a benefit of $57, before...

  • Page 87
    ... 10% fixed-to-floating rate junior subordinated debentures due 2068 with a $1.75 billion aggregate principal amount held by Allianz. Loss on extinguishment of debt consists of the premium associated with repurchasing the debentures at an amount greater than the face amount, the write-off of...

  • Page 88
    ... receiving long term benefit payments or annuity payouts. • • • • • The Company's processes for managing these risks include disciplined underwriting protocols, exposure controls, sophisticated risk based pricing, risk modeling, risk transfer, and capital management strategies...

  • Page 89
    ... that span the Company's insurance portfolio. ERM limits for terrorism apply to aggregations of risk across property-casualty, group benefits and specific asset portfolios and are defined based on a deterministic, single-site conventional terrorism attack scenario. The Company manages its potential...

  • Page 90
    ... 10% of total available capital resources. In evaluating these scenarios, the Company assesses the impact on group life policies, short-term and long term disability, annuities, COLI, property & casualty claims, and losses in the investment portfolio associated with market declines in the event of...

  • Page 91
    ... report, released October 2, 2006, were that the high level of uncertainty associated with predicting the frequency of terrorist attacks, coupled with the unwillingness of some insurance policyholders to purchase insurance coverage, makes predicting long-term development of the terrorism risk market...

  • Page 92
    ... involuntary assigned risk pools and the value of annuity contracts held under structured settlement agreements. Reinsurance recoverables due from mandatory pools are backed by the financial strength of the property and casualty insurance industry. Annuities purchased from third-party life insurers...

  • Page 93
    ... Corporation in Florida ("Citizens"), a non-affiliate insurer, provides property insurance to Florida homeowners and businesses that are unable to obtain insurance from other carriers, including for properties deemed to be "high risk." Citizens maintains a Personal Lines account, a Commercial Lines...

  • Page 94
    ... 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...

  • Page 95
    ... retirement benefit obligations. An increase in interest rates from current levels is generally a favorable 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...

  • Page 96
    ... guaranteed investment contracts, other investment and universal life-type contracts and certain insurance products such as long-term disability. Asset accumulation vehicles primarily require a fixed rate payment, often for a specified period of time, such as fixed rate annuities with a market value...

  • Page 97
    ...-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., disability contracts) issued by the Company's Group Benefits segment, for which the payment rates...

  • Page 98
    ... benefits, primarily associated with variable annuity products, which increase the Company's potential benefit exposure in the periods that equity markets decline. The Company is also subject to equity risk based upon the assets that support its pension plans. The asset allocation mix is reviewed...

  • Page 99
    ...level, the contract holder will receive an annuity equal to the guaranteed remaining balance ("GRB"). For the Company's "life-time" GMWB products, this annuity can exceed the GRB. As the account value fluctuates with equity market returns on a daily basis and the "life-time" GMWB payments may exceed...

  • Page 100
    ... accumulation of actual claims paid GMWB (excluding life-contingent Fair Value portions) Risk Hedging Variable Annuity Hedging Program Equity Market Levels Equity Market Levels / Implied Volatility / Interest Rates [1] Each of these guarantees and the related U.S. GAAP accounting volatility will...

  • Page 101
    ... US swap rate of 2.34%; and 3) S&P 10yr volatility of 26.58% The above sensitivity analysis is an estimate and should not be used to predict the future financial performance of the Company's variable annuity hedge programs. The actual net changes in the fair value liability and the hedging assets...

  • Page 102
    ... risk associated with the yen denominated Japan fixed payout annuities reinsured from HLIKK. The Company has entered into pay U.S. dollar, receive yen swap contracts to hedge the currency exposure between the U.S. dollar denominated assets and the yen denominated fixed liability reinsurance payments...

  • Page 103
    ... 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 credit risk exposure from its inception to its maturity or sale. Both the investment and...

  • Page 104
    ...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 105
    ..., or asset pool. The Company purchases credit protection through credit default swaps to economically hedge and manage credit risk of certain fixed maturity investments across multiple sectors of the investment portfolio. The Company also enters into credit default swaps that assume credit risk as...

  • Page 106
    ... ("CLOs") Commercial real estate ("CREs") Other [1] Commercial mortgage-backed securities ("CMBS") Agency backed [2] Bonds Interest only ("IOs") Corporate Basic industry Capital goods Consumer cyclical Consumer non-cyclical Energy [3] Financial services Tech./comm. Transportation Utilities [3] Other...

  • Page 107
    ...short-term investments on the Consolidated Balance Sheets. Excludes equity securities, FVO with cost and fair value of $45 and $45, respectively, that are hedged with total return swaps. [2] Includes sovereigns for which oil exports are greater than 4% of gross domestic product. The Company manages...

  • Page 108
    ... table above. The Company manages the credit risk associated with emerging market securities within the investment portfolio on an on-going basis using macroeconomic analysis and issuer credit analysis subject to diversification and individual credit risk management limits. For additional details...

  • Page 109
    The Company manages the credit risk associated with the European securities within the investment portfolio on an on-going basis using several processes which are supported by macroeconomic analysis and issuer credit analysis. For additional details regarding the Company's management of credit risk,...

  • Page 110
    ... through investment grade banking and insurance institutions. The following table presents the Company's fixed maturity, AFS and equity, AFS securities in the financial services sector that are included in the Securities by Type table above. December 31, 2014 Tmortized Cost Fair Value Net Unrealized...

  • Page 111
    ... by Type table above. Credit protection represents the current weighted average percentage of the outstanding capital structure subordinated to the Company's investment holding that is available to absorb losses before the security incurs the first dollar loss of principal and excludes any equity...

  • Page 112
    ... loan portfolio. Since December 31, 2013, the Company funded $604 of commercial whole loans with a weighted average loan-to-value ("LTV") ratio of 61% and a weighted average yield of 4.0%. The Company continues to originate commercial whole loans within primary markets, such as office, industrial...

  • Page 113
    ... other alternative investments which include hedge funds, mortgage and real estate funds, mezzanine debt funds, and private equity and other funds. Hedge funds are comprised of approximately half credit and equity related funds and approximately half global macro related funds with a market neutral...

  • Page 114
    ... market and collateral performance assumptions, these securities with exposure to commercial real estate have sufficient credit protection levels to receive contractually obligated principal and interest payments. As part of the Company's ongoing security monitoring process, the Company has reviewed...

  • Page 115
    ... 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. For the years ended December 31, 2014 ABS CRE CDOs CMBS Bonds IOs Corporate Equity Municipal Agency RMBS...

  • Page 116
    ... on equity securities of $63 largely comprised of downgraded preferred equity securities of financial institutions. The Company's credit impairments totaled $48, primarily concentrated in structured securities associated with residential and commercial real estate, as well as ABS small business...

  • Page 117
    ...its subsidiaries, principally its insurance operations, as well as the issuance of common stock, debt or other capital securities and borrowings from its credit facilities, as needed. As of December 31, 2014, HFSG Holding Company held fixed maturities, short-term investments and cash of $2.1 billion...

  • Page 118
    ... defined benefit pension plan who had separated from service, but who had not yet commenced annuity benefits. These participants had until November 2014 to elect to receive their benefit in a lump-sum payment, rather than as an annuity. The Company made benefit payments in December 2014 using assets...

  • Page 119
    ... 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...

  • Page 120
    ... management and investment income, while investing cash flows originate from maturities and sales of invested assets. The primary uses of funds are to pay claims, claim adjustment expenses, commissions and other underwriting expenses, taxes, to purchase new investments and to make dividend payments...

  • Page 121
    ...Group Benefits will be funded by Hartford Life and Accident Insurance Company. Obligations of Talcott Resolution will generally be funded by Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company. Contractholder obligations of the former Retirement Plans business were funded...

  • Page 122
    ...the general account option for annuities of the former Retirement Plans business and universal life contracts sold by the former Individual Life business, may be funded through operating cash flows of Life Operations, available short-term investments, or Life Operations may be required to sell fixed...

  • Page 123
    ... long-term liabilities are net unrecognized tax benefits of $48, retained Japan fixed payout annuity liabilities of $886, and consumer notes of $74. Consumer notes include principal payments and contractual interest for fixed rate notes and interest based on current rates for floating rate notes...

  • Page 124
    ... of treasury stock of $1.8 billion. Cash used for financing activities in 2013 primarily consists of net outflows on investment and universal life-type contracts of $2.1 billion, decrease in securities loaned or sold under agreements to repurchase of $1.9 billion, repayment of long term debt of...

  • Page 125
    ... 24, 2015: Insurance Financial Strength Ratings: Hartford Fire Insurance Company Hartford Life and Accident Insurance Company Hartford Life Insurance Company Hartford Life and Annuity Insurance Company Other Ratings: The Hartford Financial Services Group, Inc.: Senior debt Commercial paper T.M. Best...

  • Page 126
    ... 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 127
    ... of 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 Company's U.S. insurance companies' states of domicile impose risk-based capital...

  • Page 128
    ... on the insurance business. These proposals and initiatives include, or could include, new taxes or assessments on large financial institutions, changes pertaining to the income tax treatment of insurance companies and life insurance products and annuities, repeal or reform of the estate tax and...

  • Page 129
    ... 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, which are eligible for the dividends received deduction ("DRD"). The DRD reduces the...

  • Page 130
    ... the Company's disclosure controls and procedures are effective for the purposes set forth in the definition thereof in Exchange Act Rule 13a-15(e) as of December 31, 2014. Management's annual report on internal control over financial reporting The management of The Hartford Financial Services Group...

  • Page 131
    ... opinion. A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other...

  • Page 132
    ...-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 of Operations and Technology (August 2014 - present); President of Global Client Services, EXL (July 2010...

  • Page 133
    ... on Stock Ownership" and is incorporated herein by reference. Equity Compensation Plan Information The following table provides information as of December 31, 2014 about the securities authorized for issuance under the Company's equity compensation plans. The Company maintains The Hartford Incentive...

  • Page 134
    ... Documents filed as a part of this report: (1) Consolidated Financial Statements. See Index to Consolidated Financial Statements and Schedules elsewhere herein. (2) Consolidated Financial Statement Schedules. See Index to Consolidated Financial Statement and Schedules elsewhere herein. (3) Exhibits...

  • Page 135
    ...Investments in Affiliates Schedule II - Condensed Financial Information of The Hartford Financial Services Group, Inc Schedule III - Supplementary Insurance Information Schedule IV - Reinsurance Schedule V - Valuation and Qualifying Accounts Schedule VI - Supplemental Information Concerning Property...

  • Page 136
    ... accompanying consolidated balance sheets of The Hartford Financial Services Group, Inc. and its subsidiaries (collectively, the "Company") as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, changes in stockholders' equity, and cash flows...

  • Page 137
    ... reinsurance Other net realized capital gains Total net realized capital gains Other revenues Total revenues Benefits, losses and expenses Benefits, losses and loss adjustment expenses Amortization of deferred policy acquisition costs and present value of future profits Insurance operating costs and...

  • Page 138
    ... THE HTRTFORD FINTNCITL SERVICES GROUP, INC. Consolidated Statements of Comprehensive Income For the years ended December 31, (In millions) 2014 2013 2012 Comprehensive Income Net income (loss) Other comprehensive income (loss): Change in net unrealized gain (loss) on securities Change in OTTI...

  • Page 139
    ... investments Cash (includes variable interest entity assets, at fair value, of $9 and $0) Premiums receivable and agents' balances, net Reinsurance recoverables, net Deferred policy acquisition costs Deferred income taxes, net Goodwill Property and equipment, net Other assets Separate account assets...

  • Page 140
    ... THE HTRTFORD FINTNCITL SERVICES GROUP, INC. Consolidated Statements of Changes in Stockholders' Equity For the years ended December 31, (In millions, except for share data) 2014 2013 2012 Preferred Stock Balance, beginning of period Conversion of shares to common stock Balance, end of period...

  • Page 141
    ... Change in receivables and other assets Change in payables and accruals Change in accrued and deferred income taxes Net realized capital (gains) losses Net disbursements from investment contracts related to policyholder funds - international variable annuities Net decrease in equity securities...

  • Page 142
    Income taxes paid (received) Interest paid 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. $ $ $ (313) $ 377 $ - $ 69 $ 402 $ - $ (486) 461 67 F-7

  • Page 143
    ... 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 otherthan-temporary impairments on available-for-sale securities...

  • Page 144
    ... assessed as consideration for policy origination of a universal life-type contract, are deferred and recognized in income over the period benefited, generally in proportion to estimated gross profits. The Company provides investment management, administrative and distribution services to mutual...

  • Page 145
    ... and accordingly the Company's share of earnings are included in net investment income. Recognition of income related to limited partnerships and other alternative investments is delayed due to the availability of the related financial information, as private equity and other funds are generally on...

  • Page 146
    ... and the Company's best estimate of expected future cash flows discounted at the security's effective yield prior to the impairment, which typically represents current market liquidity and risk premiums. The previous amortized cost basis less the impairment recognized in net realized capital losses...

  • Page 147
    ...mortgage loans are recorded in net investment income when earned. For equity securities, dividends will be recognized as investment income on the ex-dividend date. Limited partnerships and other alternative investments primarily use the equity method of accounting to recognize the Company's share of...

  • Page 148
    ... State of Illinois and the State of New York insurance departments. Accounting and Financial Statement Presentation of Derivative Instruments and Hedging Activities Derivative instruments are recognized on the Consolidated Balance Sheets at fair value and are reported in Other Investments and Other...

  • Page 149
    ...Tccounting Policies (continued) Other Investment and/or Risk Management Activities The Company's other investment and/or risk management activities primarily relate to strategies used to reduce economic risk or replicate permitted investments and do not receive hedge accounting treatment. Changes in...

  • Page 150
    ...costs primarily include commissions, premium taxes, costs of policy issuance and underwriting, and certain other expenses that are directly related to successfully issued contracts. For property and casualty insurance products and group life, disability and accident contracts, costs are deferred and...

  • Page 151
    ... THE HTRTFORD FINTNCITL SERVICES GROUP, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (continued) 1. Basis of Presentation and Significant Tccounting Policies (continued) For life insurance products, the DAC asset related to most universal life-type contracts (including variable annuities) is...

  • Page 152
    ... Consolidated Statements of Operations. The Company earns fees for 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...

  • Page 153
    ... were discounted to present value using a weighted average interest rate of 4.53% in 2014 and 4.71% in 2013. Other Policyholder Funds and Benefits Payable Other policyholder funds and benefits payable consist of non-variable account values associated with universal life-type contracts and investment...

  • Page 154
    ...and variable annuities and universal life insurance. 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, including credited interest, amounts that have been assessed to compensate the Company for...

  • Page 155
    ... funds and benefits payable - international variable annuities Short-term debt Other liabilities Sale of Hartford Life International Limited On December 12, 2013, the Company completed the sale of all of the issued and outstanding equity of HLIL in a cash transaction to Columbia Insurance Company...

  • Page 156
    ... 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...

  • Page 157
    ...18) 0.38 (0.55) (0.17) [1] For additional information, see Note 15 - Equity and Note 18 - Stock Compensation Plans of Notes to Consolidated Financial Statements. Basic earnings per share is computed based on the weighted average number of common shares outstanding during the year. Diluted earnings...

  • Page 158
    ... of customized insurance products and risk management services including professional liability, bond, and specialty casualty coverages. Personal Lines Personal Lines provides standard automobile, homeowners and personal umbrella coverages to individuals across the U.S., including a special program...

  • Page 159
    ..., AARP members accounted for earned premiums of $3.0 billion, $2.9 billion and $2.8 billion, respectively. For the years ended December 31, Net income (loss) 2014 2013 2012 Commercial Lines Personal Lines Property & Casualty Other Operations Group Benefits Mutual Funds Talcott Resolution Corporate...

  • Page 160
    ...) 246 $ Ts of December 31, 159 65 14 31 38 (99) (517) (309) $ Tssets 2014 2013 Commercial Lines Personal Lines Property & Casualty Other Operations Group Benefits Mutual Funds Talcott Resolution Corporate [1] Total assets $ 28,451 $ 5,983 4,328 9,686 443 191,801 4,321 245,013 $ 27,119 5,873...

  • Page 161
    ...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 162
    ... Equity securities, trading Equity securities, AFS Derivative assets Credit derivatives Equity derivatives Interest rate derivatives GMWB hedging instruments Macro hedge program Other derivative contracts Total derivative assets [1] Short-term investments Limited partnerships and other alternative...

  • Page 163
    ..., trading Equity securities, AFS Derivative assets Credit derivatives Foreign exchange derivatives Interest rate derivatives GMWB hedging instruments Macro hedge program International program hedging instruments Other derivative contracts Total derivative assets [1] Short-term investments Limited...

  • Page 164
    F-28

  • Page 165
    ... values of certain financial assets and liabilities based on quoted market prices where available, and where prices represent a reasonable estimate of fair value. The Company also determines fair value based on future cash flows discounted at the appropriate current market rate. Fair values reflect...

  • Page 166
    ... value based upon the available market data, the price received from the third party is adjusted accordingly and approved by the Valuation Committee. The Company's internal pricing model utilizes the Company's best estimate of expected future cash flows discounted at a rate of return that a market...

  • Page 167
    ..., exchange-traded equity securities, short-term investments, and exchange traded futures and option 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 measurement date. For most...

  • Page 168
    ... 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 169
    ... impact to the fair value as that presented in the table above. [3] Level 3 corporate and municipal securities excludes those for which the Company bases fair value on broker quotations as discussed below. [4] Decrease for above market rate coupons and increase for below market rate coupons. F-33

  • Page 170
    ... Interest rate swaps Long interest rate swaptions GMWB hedging instruments Equity options Customized swaps Macro hedge program Equity options International program hedging [2] Equity options Short interest rate swaptions Long interest rate swaptions (24) 42 72 74 139 (35) (13) 50 Discounted cash...

  • Page 171
    ...and risk management professionals. 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...

  • Page 172
    ... of the underlying variable annuity contracts across all policy durations for in force business. Range represents assumed cumulative percentages of policyholders that would elect to reset their guaranteed benefit base. Range represents implied market volatilities for equity indices based on multiple...

  • Page 173
    ... from policyholders that do not utilize these riders. Separate Account Assets Separate account assets are primarily invested in mutual funds. Other separate account assets include fixed maturities, limited partnerships, equity securities, short-term investments and derivatives that are valued...

  • Page 174
    ... Hedging Macro Hedge Program Intl. Program Hedging Other Contracts Total FreeStanding Derivatives [5] Tssets (Liabilities) Credit Equity Fair value as of January 1, 2014 Total realized/unrealized gains (losses) Included in net income [1], [2], [6] Included in OCI [3] Purchases Settlements Sales...

  • Page 175
    ... Other Policyholder Funds and Benefits Payable Liabilities Guaranteed Withdrawal Benefits International Other Living Benefits Equity Linked Notes Consumer Notes Fair value as of January 1, 2014 Total realized/unrealized gains (losses) Included in net income [1] [2] [6] Settlements Fair value...

  • Page 176
    ... Hedging Macro Hedge Program Intl. Program Hedging Other Contracts Total FreeStanding Derivatives [5] Tssets (Liabilities) Credit Equity Fair value as of January 1, 2013 Total realized/unrealized gains (losses) Included in net income [1], [2], [6] Included in OCI [3] Purchases Settlements Sales...

  • Page 177
    ... equity securities in order to align the accounting with total return swap contracts that hedge the risk associated with the investments. The swaps do not qualify for hedge accounting and the change in value of both the equity securities and the total return swap are recorded in net realized capital...

  • Page 178
    ... accounted for using the fair value option reported in net realized capital gains and losses in the Company's Consolidated Statements of Operations. For the years ended December 31, 2014 Tssets Fixed maturities, FVO Corporate CRE CDOs Foreign government RMBS Total fixed maturities, FVO Equity...

  • Page 179
    ... estimated using discounted cash flow calculations based on current lending rates for similar type loans. Current lending rates reflect changes in credit spreads and the remaining terms of the loans. Fair values for other policyholder funds and benefits payable, and assumed investment contracts, not...

  • Page 180
    ... [1] Equity securities, AFS Mortgage loans Policy loans Limited partnerships and other alternative investments Other investments [2] Investment expenses Total net investment income [1] Includes net investment income on short-term investments. [2] Includes income from derivatives that hedge fixed...

  • Page 181
    ... to the sale of the Individual Life and Retirement Plans businesses for the year ended December 31, 2013. Sales of AFS securities in 2014 were primarily a result of duration and liquidity management, as well as tactical changes to the portfolio as a result of changing market conditions. Other...

  • Page 182
    ...Due to the potential for variability in payment spreads (i.e. prepayments or extensions), mortgage-backed and asset-backed securities are not categorized by contractual maturity. Concentration of Credit Risk The Company aims to maintain a diversified investment portfolio including issuer, sector and...

  • Page 183
    ...were the Government of Japan, Goldman Sachs Group Inc., and State of Illinois which each comprised less than 4% of total invested assets. The Company's three largest exposures by sector as of December 31, 2014 were municipal securities, financial services, and utilities which comprised approximately...

  • Page 184
    ...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 weighted average DSCR of the Company's commercial mortgage loan portfolio was 2.51x as of December 31, 2014. As of...

  • Page 185
    ...) 6 . Investments and Derivative Instruments (continued) The following table presents the carrying value of the Company's commercial mortgage loans by LTV and DSCR. Commercial Mortgage Loans Credit Quality December 31, 2014 Loan-to-value Carrying Value Tvg. Debt-Service Coverage Ratio December 31...

  • Page 186
    .... [4] Total assets included in fixed maturities, FVO, short-term investments, and equity, AFS in the Company's Consolidated Balance Sheets. CDOs represent structured investment vehicles for which the Company has a controlling financial interest as it provides collateral management services, earns...

  • Page 187
    ... net income. Accordingly, the Company is disclosing aggregated summarized financial data for the Company's limited partnership investments. This aggregated summarized financial data does not represent the Company's proportionate share of limited partnership assets or earnings. Aggregate total assets...

  • Page 188
    ... fixed maturity securities or liability contracts. The hedge strategies by hedge accounting designation include: Cash flow hedges Interest rate swaps are predominantly used to manage portfolio duration and better match cash receipts from assets with cash disbursements required to fund liabilities...

  • Page 189
    .... Equity index swaps and options Beginning in 2014, the Company entered into total return swaps to hedge equity risk of equity common stock investments which are accounted for using fair value option in order to align the accounting treatment with net realized capital gains (losses). The Company...

  • Page 190
    ... funds and benefits payable reinsured under a modified coinsurance arrangement in connection with the sale of the Individual Life business structured as a reinsurance transaction. The assets are primarily held in a trust established by the Company. The Company pays or receives cash quarterly...

  • Page 191
    ... Japanese fixed annuity hedging instruments [1] Credit contracts Credit derivatives that purchase credit protection Credit derivatives that assume credit risk [2] Credit derivatives in offsetting positions Equity contracts Equity index swaps and options Variable annuity hedge program GMWB product...

  • Page 192
    ... termination of the hedging program associated with the Japan variable annuity product due to the sale of HLIKK. For further discussion on the sale, see the Sale of Hartford Life Insurance KK section in Note 2 - Business Dispositions of Notes to the Consolidated Financial Statements. The decrease in...

  • Page 193
    ... Interest and Cash Collateral Pledged [3] Financial Collateral Pledged [4] Net Tmount Description Other liabilities $ (2,626) $ (1,496) $ (1,223) $ 93 $ (1,204) $ 74 [1] Included in other investments in the Company's Consolidated Balance Sheets. [2] Included in other assets in the...

  • Page 194
    ... occurring associated with variable rate bonds sold as part of the Individual Life and Retirement Plans business dispositions. For further information on the business dispositions, see Note 2 - Business Dispositions of Notes to the Consolidated Financial Statements. Fair Value Hedges For derivative...

  • Page 195
    ... fixed payout annuity hedge [1] 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 GMWB product derivative GMWB reinsurance contracts GMWB hedging instruments...

  • Page 196
    ... credit risk as part of replication transactions resulted from credit spread tightening. The net loss on the macro hedge program was primarily due to the passage of time, an improvement in domestic equity markets, and a decrease in equity volatility. The net loss related to the Japan fixed annuity...

  • Page 197
    ... standard market indices of diversified portfolios of corporate and CMBS issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index. [5] Excludes investments that contain an embedded credit derivative for which the Company has...

  • Page 198
    ... to sell or re-pledge these securities. As of December 31, 2014 and 2013, the Company accepted cash collateral associated with derivative instruments of $327 and $180, respectively, which was invested and recorded in the Consolidated Balance Sheets in fixed maturities and short-term investments with...

  • Page 199
    ... Net reinsurance recoverables Life Insurance Products: Future policy benefits and unpaid loss and loss adjustment expenses and other policyholder funds and benefits payable Sold businesses (MassMutual and Prudential) Other reinsurers Net reinsurance recoverables [1] Reinsurance recoverables, net...

  • Page 200
    ... except that the cash and investments that support the liabilities for contract benefits are not transferred to the assuming company, and settlements 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...

  • Page 201
    ... operations. For further information regarding this transaction, see Note 2 - Business Dispositions of Notes to Consolidated Financial Statements. [2] Includes accelerated amortization of $352 and $2,374 recognized upon the sale of the Retirement Plans and Individual Life businesses, respectively...

  • Page 202
    ... Statements of Operations. The fair value of the Individual Life reporting unit as of September 30, 2012 was based on a negotiated transaction price. The annual goodwill assessment for the Mutual Funds and Personal Lines reporting units and the Group Benefits reporting unit within Corporate...

  • Page 203
    ... of Contents THE HTRTFORD FINTNCITL SERVICES GROUP, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (continued) 10. Separate Tccounts, Death Benefits and Other Insurance Benefit Features U.S. GMDB/GMWB, International GMDB/GMIB, and Universal Life Secondary Guarantee Benefits Changes in the gross...

  • Page 204
    ...or net premiums paid. [8] AV includes the contract holder's investment in the separate account and the general account. [9] NAR is defined as the guaranteed benefit in excess of the current AV. RNAR represents NAR reduced for reinsurance. NAR and RNAR are highly sensitive to equity markets movements...

  • Page 205
    ... for prior accident years totaled $31 in 2014, $31 in 2013, and $52 in 2012. In the opinion of management, based upon the known facts and current law, the reserves recorded for the Company's property and casualty insurance products at December 31, 2014 represent the Company's best estimate of...

  • Page 206
    ... 31, 2014 2013 2012 Auto liability Homeowners Professional liability Package business General liability Bond Commercial property Net asbestos reserves Net environmental reserves Uncollectible reinsurance Workers' compensation Workers' compensation - NY 25a Fund for Reopened Cases Change in workers...

  • Page 207
    ... due to favorable claim recoveries in both the group life and group disability lines of business, net of accretion of discount. The liability for future policy benefits and unpaid losses and loss adjustment expenses is as follows: 2014 2013 Group life term, disability and accident unpaid losses and...

  • Page 208
    ... rate. The Company incurred interest expense of $376, $397 and $457 on long-term debt for the years ended December 31, 2014, 2013 and 2012, respectively. Collateralized Tdvances Hartford Life Insurance Company ("HLIC"), an indirect wholly owned subsidiary, became a member of the Federal Home Loan...

  • Page 209
    ... accumulate additional interest 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...

  • Page 210
    ... net worth under the terms of the Credit Facility excludes AOCI and includes the Company's outstanding junior subordinated debentures and perpetual preferred securities, net of discount. In addition, the Company's maximum ratio of consolidated total debt to consolidated total capitalization...

  • Page 211
    ... basis deferred policy acquisition costs Unearned premium reserve and other underwriting related reserves Investment-related items [1] Insurance product derivatives Employee benefits Alternative minimum tax credit Net operating loss carryover [1] Foreign tax credit carryover Capital loss carryover...

  • Page 212
    .... Most of the net operating loss carryover originated from the Company's U.S. and international annuity business, including from the hedging program. Given the sale of the Japan subsidiary in June 2014, and continued runoff of the U.S. fixed and variable annuity business, the exposure to taxable...

  • Page 213
    ... of operations. Management believes that adequate provision has been made in the financial statements for any potential assessments that may result from tax examinations and other tax-related matters for all open tax years. The Company classifies interest and penalties (if applicable) as income tax...

  • 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
    ... 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 expense paid...

  • Page 216
    ... insolvency of an insurer writing any such class of insurance in the state, members of the funds are assessed to pay certain claims of the insolvent insurers. A particular state's fund assesses its members based on their respective written premiums in the state for the classes of insurance in which...

  • Page 217
    ... limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in other cases such limitations are not specified or applicable. The Company does not expect to make any payments...

  • Page 218
    ... terms of the investment agreement, these warrants initially entitled Allianz to purchase 69,115,324 shares of the Company's common stock at an exercise price of $25.32 per share. The warrant repurchase was settled on April 17, 2012. Capital Purchase Program ("CPP") Warrants As of December 31, 2014...

  • Page 219
    ... which The Hartford's insurance subsidiaries are incorporated (or deemed commercially domiciled) generally contain similar (although in certain instances somewhat more restrictive) limitations on the payment of dividends. Dividends paid to HFSG Holding Company by its life insurance subsidiaries are...

  • Page 220
    ...ability to pay dividends to its shareholders. Restricted Net Assets The Company's insurance subsidiaries had net assets of $21 billion, determined in accordance with U.S. GAAP, that were restricted from payment to the HFSG Holding Company, without prior regulatory approval at December 31, 2014. F-84

  • Page 221
    ... For the year ended December 31, 2014 Net Gain (Loss) on Cash Flow Hedging Instruments Foreign Currency Translation Tdjustments Pension and Other Postretirement Plan Tdjustments Net Unrealized Gain on Securities OTTI Losses in OCI Total TOCI Beginning balance OCI before reclassifications Amounts...

  • Page 222
    ... 31, 2013 amount includes $71 of net gains on cash flow hedging instruments relating to the sales of the Retirement Plans and Individual Life businesses. [3] The December 31, 2014 amount relates to the sale of the HLIKK variable and fixed annuity business and the December 31, 2013 amount relates...

  • Page 223
    ... Company also applies 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, management determined the long-term rate...

  • Page 224
    ... ending balances of the benefit obligation and fair value of plan assets, as well as the funded status of the Company's defined benefit pension and postretirement health care and life insurance benefit plans. International plans represent an immaterial percentage of total pension assets, liabilities...

  • Page 225
    ... do not qualify as plan assets; however, the assets are available to pay benefits for certain retired, terminated and active participants. Such assets are available to the Company's general creditors in the event of insolvency. The assets consist of equity and fixed income investments. To the extent...

  • Page 226
    ...Target Allocation The overall investment strategy of the Plan is to maximize total investment returns to provide sufficient funding for present and anticipated future benefit obligations within the constraints of a prudent level of portfolio risk and diversification. With respect to asset management...

  • Page 227
    ... alternative investments and are made up of individual investments in cash and cash equivalents, equity securities, debt securities, asset-backed securities and hedge funds. Hedge fund investments represent a diversified portfolio of partnership investments in absolute-return investment strategies...

  • Page 228
    ... 31, 2014 Tsset Category Level 1 Level 2 Level 3 Total Short-term investments: Fixed Income Securities: Corporate RMBS U.S. Treasuries Foreign government CMBS Other fixed income [1] Equity Securities: Large-cap domestic International Other investments: Hedge funds Total pension plan assets at fair...

  • Page 229
    ...Level 3 Total Short-term investments: Fixed Income Securities: Corporate RMBS U.S. Treasuries Foreign government CMBS Other fixed income [1] Equity Securities: Large-cap domestic Mid-cap domestic Small-cap domestic International Other investments: Hedge funds Total pension plan assets at fair value...

  • Page 230
    ...) 17. Employee Benefit Plans (continued) 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, 2013 Realized gains/(losses), net Changes in unrealized...

  • Page 231
    ... will be used to control risk or enhance return but will not be used for leverage purposes. Securities specifically prohibited from purchase include, but are not limited to: shares or fixed income instruments issued by The Hartford, short sales of any type within long-only portfolios, non-derivative...

  • Page 232
    ... Hartford has established defined contribution pension plans for certain employees of the Company's international subsidiaries. The cost to The Hartford for the years ended December 31, 2014, 2013, and 2012 for these plans was immaterial. As of December 31, 2014, investment and savings plan assets...

  • Page 233
    ... the Internal Revenue Code, stock appreciation rights, performance shares, restricted stock or restricted stock units, or any other form of stock-based award. The maximum number of shares, subject to adjustments set forth in the Incentive Stock Plan, that may be issued to Company employees and third...

  • Page 234
    ... SERVICES GROUP, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (continued) 18. Stock Compensation Plans (continued) For the years ended December 31, 2014 2013 2012 Expected dividend yield Expected annualized spot volatility Weighted average annualized volatility Risk-free spot rate Expected term...

  • Page 235
    ... factors. The Company did not make cash payments in settlement of stock compensation during the years ended December 31, 2014, 2013 and 2012. Subsidiary Stock Plan In 2013 the Company established a subsidiary stock-based compensation plan similar to The Hartford Incentive Stock Plan except that it...

  • Page 236
    ...) 18. Stock Compensation Plans (continued) Employee Stock Purchase Plan The Company sponsors The Hartford Employee Stock Purchase Plan ("ESPP"). Under this plan, eligible employees of The Hartford purchase common stock of the Company at a discount rate of 5% of the market price per share on the...

  • Page 237
    ...-for-sale and other Equity securities, trading Total net investment income Net realized capital losses Total revenues Benefits, losses and expenses Benefits, losses and loss adjustment expenses Benefits, losses and loss adjustment expenses - returns credited on international variable annuities...

  • Page 238
    ... in insurance operating costs and other expenses 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, 2014 2013 2012 Commercial Lines Personal Lines Group Benefits Mutual Funds Talcott Resolution...

  • Page 239
    ...2014 2013 June 30, 2014 2013 September 30, 2014 2013 December 31, 2014 2013 Revenues Benefits, losses and expenses Income from continuing operations, net of tax Income (loss) from discontinued operations, net of tax Net income (loss) Less: Preferred stock dividends and discount accretion Net income...

  • Page 240
    ... subdivisions Foreign governments Public utilities All other corporate bonds All other mortgage-backed and asset-backed securities Total fixed maturities, available-for-sale Fixed maturities, at fair value using fair value option Total fixed maturities Equity Securities Common stocks Industrial...

  • Page 241
    ...of subsidiaries Income tax benefit Loss before earnings of subsidiaries Earnings of subsidiaries Net income (loss) Other comprehensive income (loss) - parent company: Change in net gain/loss on cash-flow hedging instruments Change in net unrealized gain/loss on securities Change in pension and other...

  • Page 242
    ... Condensed Statements of Cash Flows Operating Activities Net income Loss on extinguishment of debt Undistributed earnings of subsidiaries Change in operating assets and liabilities Cash provided by operating activities Investing Activities Net sales of short-term investments Capital contributions to...

  • Page 243
    ... Expenses [1] Unearned Premiums [1] Other Policyholder Funds and Benefits Payable [1] Segment Deferred Policy Tcquisition Costs [1] Ts of December 31, 2014 Commercial Lines Personal Lines Property & Casualty Other Operations Group Benefits Mutual Funds Talcott Resolution Corporate Consolidated Ts...

  • Page 244
    ... Income and Other Net Investment Income (Loss) Benefits, Losses and Loss Tdjustment Expenses Tmortization of Deferred Policy Tcquisition Costs Net Written Premiums [3] For the year ended December 31, 2014 Commercial Lines Personal Lines Property & Casualty Other Operations Group Benefits Mutual...

  • Page 245
    ... Companies Net Tmount For the year ended December 31, 2014 Life insurance in-force Insurance revenues Property and casualty insurance Life insurance and annuities Accident and health insurance Total insurance revenues For the year ended December 31, 2013 Life insurance in-force Insurance revenues...

  • Page 246
    THE HTRTFORD FINTNCITL SERVICES GROUP, INC. SCHEDULE V VTLUTTION TND QUTLIFYING TCCOUNTS (In millions) Charged to Costs and Expenses Write-offs/ Payments/ Other Balance January 1, Translation Tdjustment Balance December 31, 2014 Allowance for doubtful accounts and other Allowance for ...

  • Page 247
    THE HTRTFORD FINTNCITL SERVICES GROUP, INC. SCHEDULE VI SUPPLEMENTTL INFORMTTION CONCERNING PROPERTY TND CTSUTLTY INSURTNCE OPERTTIONS (In millions) Discount Deducted From Liabilities [1] Years ended December 31, 2014 2013 Losses and Loss Tdjustment Expenses Incurred Related to: Current Year Prior ...

  • Page 248
    ... caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE HARTFORD FINANCIAL SERVICES GROUP, INC. By: /s/ Scott R. Lewis Scott R. Lewis Senior Vice President and Controller (Chief accounting officer and duly authorized signatory) Date: February 27, 2015 II-1

  • Page 249
    ... Executive Officer and Director (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer) Senior Vice President and Controller (Principal Accounting Officer) Director February 27, 2015 February 27, 2015 February 27, 2015 Date February 27, 2015

  • Page 250
    ... and among Massachusetts Mutual Life Insurance Company, Hartford Life, Inc. and The Hartford Financial Services Group, Inc. ("The Hartford") dated as of September 4, 2012. Purchase and Sale Agreement by and among Hartford Life, Inc., Prudential Financial, Inc. and The Hartford dated as of September...

  • Page 251
    ...of New York Mellon Trust Company, N.A., as Trustee. Replacement Capital Covenant, dated as of June 6, 2008. Warrant to Purchase Shares of Common Stock of The Hartford Financial Services Group, Inc., dated June 26, 2009. Stock Purchase Agreement, dated as of April 28, 2014, between Hartford Life, Inc...

  • Page 252
    ... Excess Savings Plan IA, as amended effective May 28, 2013. Put Option Agreement, dated February 12, 2007, among The Hartford, Glen Meadow ABC Trust and LaSalle Bank, N.A. Statement Re: Computation of Ratio of Earnings to Fixed Charges. ** Subsidiaries of The Hartford Financial Services Group, Inc...

  • Page 253
    ... 101.LTB 101.PRE Form File No. Exhibit No. Filing Date Certification of Christopher J. Swift pursuant to Section 906 ...Form File No. Exhibit No. Filing Date * ** Management contract, compensatory plan or arrangement. Filed with the Securities and Exchange Commission as an exhibit to this report...

  • Page 254
    The Hartford Senior Executive Officer Severance Pay Plan (Tier 1) This document describes your benefits under The Hartford Senior Executive Officer Severance Pay Plan, and includes the text of the Plan and other important information. As Amended and Restated Effective October 1, 2014 II-7

  • Page 255
    ... required to be executed by the Plan Administrator. For purposes of the Plan, "Employee" means any person regularly employed on the United States payroll by The Hartford Financial Services Group, Inc., Hartford Fire Insurance Company, or any of their designated subsidiaries or affiliates which have...

  • Page 256
    ...that the Effective Date is prior to a Change of Control as defined in Section 11, you are under investigation, at the time severance pay would otherwise be due, for misconduct deemed by management to be a serious violation of the Company's policies or its Code of Ethics and Business Conduct; (3) you...

  • Page 257
    ... of your Base Pay plus Target Bonus. The severance payment provided shall be in addition to any Base Pay earned, but unpaid, for services rendered to the Company on or prior to the Effective Date, plus any paid time off accrued as of such date. 6. Pro-Rata Annual Bonus and Treatment of Long Term...

  • Page 258
    ... pay and a pro-rata annual bonus and any other payment made by the Company after the Effective Date shall not be taken into account for any purpose under any employee benefit plan of the Company, including but not limited to The Hartford Investment and Savings Plan, The Hartford Excess Savings Plan...

  • Page 259
    ..., department, business or function of the Company or a portion thereof at which you are employed is sold, divested or outsourced in a transaction that does not qualify as a Change of Control under Section 11 hereof, you are eligible to receive severance benefits under Section 5 and a pro-rata annual...

  • Page 260
    ...in your qualifying for benefits under the Company's Long Term Disability Plan for Salaried Employees, or (ii) you voluntarily terminate employment with the Company in a Termination for Good Reason (as defined below), then you shall receive severance pay and be eligible for a pro-rata annual bonus as...

  • Page 261
    ... the date of receipt of the Overpayment, which you shall have an obligation to repay to the Company on demand, together with interest on such amount at the applicable federal rate provided for in Section 7872(f)(2) of the Code. In the event that the Accounting Firm, based upon controlling precedent...

  • Page 262
    ... reduction in your Base Pay or Target Bonus; (iii) the Company's requiring you to be based at any office or location more than 50 miles from the location at which you performed your services immediately prior to the Change of Control (provided that such change of office or location also entails...

  • Page 263
    ... to devote your full attention during normal business hours to the business and affairs of the Company and to use your best efforts to perform faithfully and efficiently the responsibilities assigned to you except for time away from work authorized by Company policy or state or federal law, which...

  • Page 264
    ... You must accept the terms of a separation agreement, including but not limited to a release of all claims that you may have against the Company, the Company's directors, officers, employees and employee benefit plans, in a form provided by the Plan Administrator or designee (the "Separation...

  • Page 265
    ... of Control, any severance pay otherwise due to you may be offset by any costs to the Company in connection with any sums for which you are personally responsible. 14. Administration of Plan Responsibility for administration of this Plan rests with the Company's Executive Vice President, Human...

  • Page 266
    ...with a change in law or to avoid any payments hereunder being subject to an additional tax under Section 409A of the Code, or (ii) so long as such amendment does not adversely affect (A) the eligibility of any Eligible Employee to receive benefits hereunder or (B) the amount or type of benefits that...

  • Page 267
    ... thereon from the date such expense was paid by you at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually. (B) Unfunded. Benefits under this Plan are paid for entirely by the Company from its general assets. (C) Withholding. Any payments provided for...

  • Page 268
    ...unless it is authorized by the Chairman of The Hartford Financial Services Group, Inc., and such agreement is in writing. Further no document, communication or publication of The Hartford Financial Services Group, Inc., the Company, or any affiliate of either of the foregoing should be understood as...

  • Page 269
    THE HARTFORD SENIOR EXECUTIVE SEVERANCE PAY PLAN (Tier 2) This document describes your benefits under The Hartford Senior Executive Severance Pay Plan, and includes the text of the Plan and other important information. As Amended and Restated Effective October 1, 2014 II-22

  • Page 270
    ... required to be executed by the Plan Administrator. For purposes of the Plan, "Employee" means any person regularly employed on the United States payroll by The Hartford Financial Services Group, Inc., Hartford Fire Insurance Company, or any of their designated subsidiaries or affiliates which have...

  • Page 271
    ...that the Effective Date is prior to a Change of Control as defined in Section 11, you are under investigation, at the time severance pay would otherwise be due, for misconduct deemed by management to be a serious violation of the Company's policies or its Code of Ethics and Business Conduct; (3) you...

  • Page 272
    ...the applicable Company retirement plan in effect on the Effective Date. The severance payment provided shall be in addition to any Base Pay earned, but unpaid, for services rendered to the Company on or prior to the Effective Date, plus any paid time off accrued as of such date. 6. Pro-Rata Annual...

  • Page 273
    ... Directors of The Hartford Financial Services Group, Inc., certifies that the performance goals applicable to the annual bonus, as preestablished by such Committee in accordance with Section 162(m) of the Code, have been attained. As provided in Section 4(2), prior to a Change of Control as defined...

  • Page 274
    ... pay and a pro-rata annual bonus and any other payment made by the Company after the Effective Date shall not be taken into account for any purpose under any employee benefit plan of the Company, including but not limited to The Hartford Investment and Savings Plan, The Hartford Excess Savings Plan...

  • Page 275
    ... a Change of Control under Section 11 hereof, you are eligible to receive severance benefits under Section 5 and a pro-rata annual bonus in accordance with Section 6 of this Plan provided that: (1) you are a Covered Employee at the time of the transaction whose employment with the Company terminates...

  • Page 276
    ...in your qualifying for benefits under the Company's Long Term Disability Plan for Salaried Employees, or (ii) you voluntarily terminate employment with the Company in a Termination for Good Reason (as defined below), then you shall receive severance pay and be eligible for a pro-rata annual bonus as...

  • Page 277
    ... shall be borne by the Company. (A) Definitions. For purposes of this Section 11: "Change of Control" means an event that qualifies as a Change of Control under The Hartford 2014 Incentive Stock Plan, as it may be amended from time to time. "Termination For Good Reason" means a termination of your...

  • Page 278
    ... Reason if (i) you have consented in writing to the occurrence of the event giving rise to the claim of Termination For Good Reason, or (ii) if you have delivered a notice of termination based on a claim of Termination For Good Reason to the Company, and the facts and circumstances specified therein...

  • Page 279
    ... You must accept the terms of a separation agreement, including but not limited to a release of all claims that you may have against the Company, the Company's directors, officers, employees and employee benefit plans, in a form provided by the Plan Administrator or designee (the "Separation...

  • Page 280
    ... of Control, any severance pay otherwise due to you may be offset by any costs to the Company in connection with any sums for which you are personally responsible. 14. Administration of Plan Responsibility for administration of this Plan rests with the Company's Executive Vice President, Human...

  • Page 281
    ...with a change in law or to avoid any payments hereunder being subject to an additional tax under Section 409A of the Code, or (ii) so long as such amendment does not adversely affect (A) the eligibility of any Eligible Employee to receive benefits hereunder or (B) the amount or type of benefits that...

  • Page 282
    ... thereon from the date such expense was paid by you at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually. (B) Unfunded. Benefits under this Plan are paid for entirely by the Company from its general assets. (C) Withholding. Any payments provided for...

  • Page 283
    ...unless it is authorized by the Chairman of The Hartford Financial Services Group, Inc., and such agreement is in writing. Further no document, communication or publication of The Hartford Financial Services Group, Inc., the Company, or any affiliate of either of the foregoing should be understood as...

  • Page 284
    ...of Directors of The Hartford Financial Services Group, Inc. (the "Company") for the administration of awards under The Hartford 2014 Incentive Stock Plan (the "Plan") for Non-Employee Directors of the Company. All terms and conditions of the Plan (including those relating to any Change of Control of...

  • Page 285
    ... case, the shares of Stock related to Restricted Units that vest shall be delivered to the NonEmployee Director within 60 days of the applicable vesting date. 4. Dividends. Pursuant to Section 7(g) of the Plan, the Restricted Unit accounts of Non-Employee Directors shall be credited with Dividend...

  • Page 286
    ...applicable trading window. The shares of Stock related to Restricted Units credited under this Rule 6 shall be delivered to the Non-Employee Director within 60 days following the date his or her Board service terminates. 7. Election to Defer Receipt of Annual Equity Retainer. A Non-Employee Director...

  • Page 287
    EXHIBIT 12.01 THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED SHARE DIVIDENDS (In millions) For the years ended December 31, 2014 EARNINGS (LOSS): 2013 2012 2011 2010 Incomn (loss) from continuing opnrations, bnforn incomn taxns Lnss: ...

  • Page 288
    ... Midwest (Indiana) Hartford Insurance Company of the Southeast (Connecticut) Hartford Insurance, Ltd. (Bermuda) Hartford Integrated Technologies, Inc. (Connecticut) Hartford International Life Reassurance Corporation (Connecticut) Hartford Investment Management Company (Delaware) Hartford Life and...

  • Page 289
    ... (Connecticut) HL Investment Advisors, LLC (Connecticut) Horizon Management Group, LLC (Delaware) HRA Brokerage Services, Inc. (Connecticut) Lanidex Class B, LLC (Delaware) New England Insurance Company (Connecticut) New England Reinsurance Corporation (Connecticut) New Ocean Insurance Company, Ltd...

  • Page 290
    ... statement schedules to reflect discontinued operations) 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. for the year ended December 31, 2014...

  • Page 291
    ... and stead to execute on his or her behalf, as an officer and/or director of The Hartford Financial Services Group, Inc. (the "Company"), an Annual Report on Form 10-K for the year ended December 31, 2014 (the "Annual Report"), and any and all amendments or supplements to the Annual Report, and to...

  • Page 292
    ...information; and eny 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. /s/ Christopher J. Swift b. Date: February 27, 2015 Christopher J. Swift Chairman and Chief Executive Officer...

  • Page 293
    ...and Any fraud, whether Br nBt material, that invBlves management Br Bther emplByees whB have a significant rBle in the registrant's internal cBntrBl Bver financial repBrting. /s/ Beth A. BBmbara b. Date: February 27, 2015 Beth A. BBmbara Executive Vice President and Chief Financial Officer II-46

  • Page 294
    ... ACT OF 2002 In connection with the Annual Report on Form 10-K for the period ended December 31, 2014 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 295
    ... ACT OF 2002 In connection with the Annual Report on Form 10-K for the period ended December 31, 2014 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...

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