The Hartford 2015 Annual Report Download - page 181

Table of Contents THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. Investments and Derivative Instruments (continued)
F-50
Mortgage Loans by Property Type
December 31, 2015 December 31, 2014
Carrying
Value Percent of Total Carrying Value Percent of Total
Commercial
Agricultural $ 26 0.5 % $ 46 0.8 %
Industrial 1,422 25.3 % 1,476 26.6 %
Lodging 26 0.5 % 26 0.5 %
Multifamily 1,345 23.9 % 1,190 21.4 %
Office 1,547 27.5 % 1,517 27.3 %
Retail 1,109 19.7 % 1,147 20.6 %
Other 149 2.6 % 154 2.8 %
Total mortgage loans $ 5,624 100.0% $ 5,556 100.0%
Mortgage Servicing
The Company originates, sells and services commercial mortgage loans on behalf of third parties and recognizes servicing fees over the
period that services are performed in fee income. As of December 31, 2015, under this program the Company serviced commercial
mortgage loans with a total outstanding principal of $359, of which $129 was serviced on behalf of third parties and $230 was retained
and reported on the Company’s Consolidated Balance Sheets, including $54 in separate account assets. Servicing rights are carried at
the lower of cost or fair value and were zero as of December 31, 2015, because servicing fees were market-level fees at origination and
remain adequate to compensate the Company to administer the servicing. The Company did not have any mortgage servicing
arrangements as of December 31, 2014.
Variable Interest Entities
The Company is involved with various special purpose entities and other entities that are deemed to be VIEs primarily as a collateral or
investment manager and as an investor through normal investment activities, as well as a means of accessing capital through a
contingent capital facility ("the facility"). For further information on the facility, see Note 11 - Debt of Notes to Consolidated Financial
Statements.
A VIE is an entity that either has investors that lack certain essential characteristics of a controlling financial interest or lacks sufficient
funds to finance its own activities without financial support provided by other entities. The Company performs ongoing qualitative
assessments of its VIEs to determine whether the Company has a controlling financial interest in the VIE and therefore is the primary
beneficiary. The Company is deemed to have a controlling financial interest when it has both the ability to direct the activities that most
significantly impact the economic performance of the VIE and the obligation to absorb losses or right to receive benefits from the VIE
that could potentially be significant to the VIE. Based on the Company’s assessment, if it determines it is the primary beneficiary, the
Company consolidates the VIE in the Company’s Consolidated Financial Statements.