The Hartford 2014 Annual Report Download - page 25

Changes in accounting principles and financial reporting requirements could result in material changes to our reported results of operations and financial
condition.
U.S. GAAP and related financial reporting requirements are complex, continually evolving and may be subject to varied interpretation by the relevant
authoritative bodies. Such varied interpretations could result from differing views related to specific facts and circumstances. Changes in U.S. GAAP and
financial reporting requirements, or in the interpretation of U.S. GAAP or those requirements, could result in material changes to our reported results and
financial condition. Moreover, the SEC is currently evaluating International Financial Reporting Standards (“IFRS”) to determine whether IFRS should be
incorporated into the financial reporting system for U.S. issuers. Certain of these standards could result in material changes to our reported results of
operations.
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The ability to execute on our capital management plan, expense reduction initiatives and other actions, which may include acquisitions, divestitures or
restructurings, is subject to material challenges, uncertainties and risks which could adversely affect our business, financial condition, results of
operations and liquidity.
The ability to execute on our capital management plan remains subject to material challenges, uncertainties and risks. We may not achieve all of the benefits
we expect to derive from our plan to repurchase our equity and reduce our debt. Our capital management plan is subject to execution risks, including, among
others, risks related to market fluctuations and investor interest and potential legal constraints that could delay execution at an otherwise optimal time. There
can be no assurance that we will in fact complete our capital management plan over the planned time frame or at all. Initiatives to reduce expenses so that our
ongoing businesses remain or become cost efficient may not be successful and we may not be able to reduce corporate and shared services expenses in the
manner and on the schedule we currently anticipate. We may take further actions beyond the capital management plan, which may include acquisitions,
divestitures or restructurings, that may involve additional uncertainties and risks that negatively impact our business, financial condition, results of
operations and liquidity.
Competitive activity may adversely affect our market share and financial results, which could have a material adverse effect on our business and results of
operations.
The industries in which we operate are highly competitive. Our principal competitors are other property and casualty insurers, group benefits providers and
other mutual fund companies. Larger competitors may have lower operating costs and an ability to absorb greater risk while maintaining their financial
strength ratings, thereby allowing them to price their products more competitively. These highly competitive pressures could result in increased pricing
pressures on a number of our products and services and may harm our ability to maintain or increase our profitability. Because of the highly competitive
nature of these industries, there can be no assurance that we will continue to compete effectively with our industry rivals, or that competitive pressure will not
have a material adverse effect on our business and results of operations.
We may experience difficulty in marketing, distributing and providing investment advisory services in relation to our products through current and future
distribution channels and advisory firms.
We distribute our insurance products and mutual funds through a variety of distribution channels, including brokers, independent agents, broker-dealers,
banks, affinity partners, our own internal sales force and other third-party organizations. In some areas of our business, we generate a significant portion of our
business through or in connection with individual third-party arrangements. For example, we market personal lines products in large part through an
exclusive licensing arrangement with AARP that continues through January 1, 2023. Our ability to distribute products through affinity partners may be
adversely impacted by membership levels and the pace of membership growth. We periodically negotiate provisions and renewals of these relationships, and
there can be no assurance that such terms will remain acceptable to us or such third parties. An interruption in our continuing relationship with certain of
these third parties, including potentially as a result of a strategic transaction or other Company initiatives, could materially affect our ability to market our
products and could have a material adverse effect on our business, financial condition, results of operations and liquidity.
If we are unable to maintain the availability of our systems and safeguard the security of our data due to the occurrence of disasters or a cyber or other
information security incident, our ability to conduct business may be compromised, we may incur substantial costs and suffer other negative consequences,
all of which may have a material adverse effect on our business, reputation, financial condition, results of operations and liquidity.
We use computer systems to process, store, retrieve, evaluate and utilize customer and company data and information. Our computer, information technology
and telecommunications systems, in turn, interface with and rely upon third-party systems or maintenance. Our business is highly dependent on our ability,
and the ability of certain third parties, to access our systems to perform necessary business functions, including, without limitation, conducting our financial
reporting and analysis, providing insurance quotes, processing premium payments, making changes to existing policies, filing and paying claims,
administering variable annuity products and mutual funds, providing customer support and managing our investment portfolios and hedging programs.
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