The Hartford 2015 Annual Report Download - page 117

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Pension Plans and Other Postretirement Benefits
While the Company has significant discretion in making voluntary contributions to the U. S. qualified defined benefit pension plan,
minimum contributions are mandated in certain circumstances pursuant to the Employee Retirement Income Security Act of 1974, as
amended by the Pension Protection Act of 2006, the Worker, Retiree, and Employer Recovery Act of 2008, the Preservation of Access to
Care for Medicare Beneficiaries and Pension Relief Act of 2010, the Moving Ahead for Progress in the 21st Century Act of 2012
(MAP-21) and Internal Revenue Code regulations. The Company made contributions to the U. S. qualified defined benefit pension plan
of $100, $100 and $100 in 2015, 2014 and 2013, respectively. No contributions were made to the other postretirement plans in 2015,
2014 and 2013. The Company’s 2015, 2014 and 2013 required minimum funding contributions were immaterial. The Company does not
have a 2016 required minimum funding contribution for the U.S. qualified defined benefit pension plan and the funding requirements for
all pension plans are expected to be immaterial. The Company has not determined whether, and to what extent, contributions may be
made to the U. S. qualified defined benefit pension plan in 2016. The Company will monitor the funded status of the U.S. qualified
defined benefit pension plan during 2016 to make this determination.
Dividends from Insurance Subsidiaries
Dividends to the HFSG Holding Company from its insurance subsidiaries are restricted by insurance regulation. The payment of
dividends by Connecticut-domiciled insurers is limited under the insurance holding company laws of Connecticut. These laws require
notice to and approval by the state insurance commissioner for the declaration or payment of any dividend, which, together with other
dividends or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the insurer’s policyholder surplus
as of December 31 of the preceding year or (ii) net income (or net gain from operations, if such company is a life insurance company)
for the twelve-month period ending on the thirty-first day of December last preceding, in each case determined under statutory insurance
accounting principles. In addition, if any dividend of a Connecticut-domiciled insurer exceeds the insurer’s earned surplus, it requires the
prior approval of the Connecticut Insurance Commissioner. The insurance holding company laws of the other jurisdictions in 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 further dependent on cash requirements of Hartford Life, Inc. ("HLI") and other factors. In addition to
statutory limitations on paying dividends, the Company also takes other items into consideration when determining dividends from
subsidiaries. These considerations include, but are not limited to, expected earnings and capitalization of the subsidiary, regulatory
capital requirements and liquidity requirements of the individual operating company.
During 2015, HFSG Holding Company received approximately $900 of dividends from its property and casualty insurance subsidiaries
including approximately $200 which was subsequently contributed to a U.K. subsidiary to effect the consolidation of certain property
and casualty runoff entities in the U.K. In addition to the property and casualty insurance subsidiaries dividends, HFSG Holding
Company received approximately $1.1 billion through a series of transactions with HLI’s life insurance subsidiaries.
In 2016, The Company’s property and casualty insurance subsidiaries are permitted to pay up to a maximum of approximately $1.6
billion in dividends to HFSG Holding Company without prior approval from the applicable insurance commissioner. In 2016, HFSG
Holding Company anticipates receiving net dividends of approximately $800 from its property and casualty insurance subsidiaries.
In 2016, Hartford Life and Accident Insurance Company ("HLA") is permitted to pay up to a maximum of $165 in dividends without
prior approval from the insurance commissioner. In 2016, HFSG Holding Company anticipates receiving dividends of approximately
$240 from HLA, subject to regulatory approval.
On January 29, 2016, Hartford Life Insurance Company ("HLIC") paid an extraordinary dividend of $500, based on approval received
from the insurance commissioner. As a result of this dividend, HLIC has no ordinary dividend capacity for the remainder of 2016.
HFSG Holding Company anticipates receiving an additional $250 of extraordinary dividends from HLIC during 2016, subject to
regulatory approval.
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.