The Hartford 2014 Annual Report Download - page 119

In 2015, the Company’s property-casualty insurance subsidiaries are permitted to pay up to a maximum of approximately $1.5 billion in dividends to HFSG
Holding Company without prior approval from the applicable insurance commissioner. In 2015, HFSG Holding Company anticipates receiving
approximately $600 in dividends from its property-casualty insurance subsidiaries, net of any dividends paid by its property-casualty subsidiaries to fund
interest payments on an intercompany note between HHI and Hartford Fire Insurance Company.
On January 30, 2015, HLA paid an extraordinary dividend of $100, based on approval received from the CTDOI. As a result of dividends and distributions
taken in the preceding twelve months, effective March 3, 2015, HLA will have approximately $155 of ordinary dividend capacity available for the remainder
of 2015. HFSG Holding Company anticipates receiving an additional $100 of dividends from HLA during 2015.
On January 30, 2015, HLIC paid an extraordinary dividend of $500, based on approval received from the CTDOI. As a result of this dividend, HLIC has no
ordinary dividend capacity for the remainder of 2015. HFSG Holding Company anticipates receiving an additional $500 of extraordinary dividends from
HLIC during 2015.
Other Sources of Capital for the HFSG Holding Company
The Hartford endeavors to maintain a capital structure that provides financial and operational flexibility to its insurance subsidiaries, ratings that support its
competitive position in the financial services marketplace (see the “Ratings” section below for further discussion), and shareholder returns. As a result, the
Company may from time to time raise capital from the issuance of equity, equity-related debt or other capital securities and is continuously evaluating
strategic opportunities. The issuance of debt, common equity, equity-related debt or other capital securities could result in the dilution of shareholder
interests or reduced net income due to additional interest expense.
Shelf Registrations
On August 9, 2013, The Hartford filed with the Securities and Exchange Commission (the “SEC”) an automatic shelf registration statement (Registration
No. 333-190506) for the potential offering and sale of debt and equity securities. The registration statement allows for the following types of securities to be
offered: debt securities, junior subordinated debt securities, preferred stock, common stock, depositary shares, warrants, stock purchase contracts, and stock
purchase units. In that The Hartford is a well-known seasoned issuer, as defined in Rule 405 under the Securities Act of 1933, the registration statement went
effective immediately upon filing and The Hartford may offer and sell an unlimited amount of securities under the registration statement during the three-year
life of the registration statement.
Contingent Capital Facility
The Hartford is party to a put option agreement that provides The Hartford with the right to require the Glen Meadow ABC Trust, a Delaware statutory trust, at
any time and from time to time, to purchase The Hartford’s junior subordinated notes in a maximum aggregate principal amount not to exceed $500. Under
the Put Option Agreement, The Hartford will pay the Glen Meadow ABC Trust premiums on a periodic basis, calculated with respect to the aggregate
principal amount of notes that The Hartford had the right to put to the Glen Meadow ABC Trust for such period. The Hartford has agreed to reimburse the
Glen Meadow ABC Trust for certain fees and ordinary expenses. The Company holds a variable interest in the Glen Meadow ABC Trust where the Company
is not the primary beneficiary. As a result, the Company did not consolidate the Glen Meadow ABC Trust. As of December 31, 2014, The Hartford has not
exercised its right to require Glen Meadow ABC Trust to purchase the Notes. As a result, the notes remain a source of capital for the HFSG Holding Company.
Commercial Paper and Revolving Credit Facility
Commercial Paper
On December 18, 2014 the Board of Directors revised the Company's commercial paper issuance authorization from $2.0 billion to $1.0 billion to align the
program with the Company's $1.0 billion five year revolving credit facility which became effective on October 31, 2014. On December 23, 2014, the
Company entered into an agreement with a dealer under the commercial paper program. While The Hartford’s maximum borrowings available under its
commercial paper program are $1.0 billion, the Company is dependent upon market conditions to access short-term financing through the issuance of
commercial paper to investors. As of December 31, 2014 there is no commercial paper outstanding.
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