The Hartford 2015 Annual Report Download - page 141

Table of Contents THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1. Basis of Presentation and Significant Accounting Policies (continued)
F-10
Significant Accounting Policies
The Company’s significant accounting policies are as follows:
Revenue Recognition
Property and casualty insurance premiums are earned on a pro rata basis over the policy period and include accruals for ultimate
premium revenue anticipated under auditable and retrospectively rated policies. Unearned premiums represent the premiums applicable
to the unexpired terms of policies in force. An estimated allowance for doubtful accounts is recorded on the basis of periodic evaluations
of balances due from insureds, management’s experience and current economic conditions. The Company charges off any balances that
are determined to be uncollectible. The allowance for doubtful accounts included in premiums receivable and agents’ balances in the
Consolidated Balance Sheets was $134 and $131 as of December 31, 2015 and 2014, respectively.
Traditional life products' premiums are recognized as revenue when due from policyholders. Group life, disability and accident
premiums are generally both due from policyholders and recognized as revenue on a pro rata basis over the period of the contracts.
Fee income for variable annuity and other universal life-type contracts consists of policy charges for policy administration, cost of
insurance charges and surrender charges assessed against policyholders’ account balances and are recognized in the period in which
services are provided. Amounts representing account value collected from policyholders for investment and universal life-type contracts
are considered deposits and are not included in revenue. Unearned revenue reserves, representing amounts assessed as consideration for
policy origination of a universal life-type contract, are deferred and recognized in income over the period benefited.
The Company provides investment management, administrative and distribution services to mutual funds. The Company earns fees from
these mutual funds which are primarily based on the average daily net asset values of the mutual funds and recorded as fee income in the
period in which the services are provided. Commission fees are based on the sale proceeds and recognized at the time of the transaction.
Transfer agent fees are assessed as a charge per account and recognized as fee income in the period in which the services are provided.
Other revenues primarily consists of servicing revenues which are recognized as services are performed.
Dividends to Policyholders
Policyholder dividends are paid to certain property and casualty and life insurance policyholders. Policies that receive dividends are
referred to as participating policies. Participating dividends to policyholders are accrued and reported in insurance operating costs and
other expenses and other liabilities using an estimate of the amount to be paid based on underlying contractual obligations under policies
and applicable state laws.
Net written premiums for participating property and casualty insurance policies represented 10%, 9% and 10% of total net written
premiums for the years ended December 31, 2015, 2014 and 2013, respectively. Participating dividends to property and casualty
policyholders were $17, $15 and $16 for the years ended December 31, 2015, 2014 and 2013, respectively.
There were no additional amounts of income allocated to participating policyholders. If limitations exist on the amount of net income
from participating life insurance contracts that may be distributed to stockholders, the policyholder’s share of net income on those
contracts that cannot be distributed is excluded from stockholders' equity by a charge to operations and an increase to a liability.